The Property Council of Australia has seized control of the wheel of the good ship Australian economy. Its former employee, Prime Minister Scomo, has decreed that house prices must rise. As Ross Gittins says today, the economy is very weak and needs fiscal support but there’s no evidence that the Government cares:
That’s the trouble, of course. There’s nothing wrong with treasurers and governors having private meetings – the more the better – but once the media are invited in the pollies will always be playing their own game, and it’s always one that puts their political standing ahead of the economy’s interests.
I suspect the message Frydenberg wanted to convey to viewers was that the economy was going fine and he had no intention of allowing fiscal stimulus to jeopardise the budget’s predicted and glorious return to surplus, which would make his name as a treasurer.
He and his Treasury officers had spent two hours explaining this to Lowe, and Lowe had accepted their arguments.
As we know, this is a way to ensure that the RBA cuts interest rates as low as they will go simply by sustaining economic weakness. And against its own wishes owing to already mountainous household debt. Frydenberg himself said as much today at the AFR:
“The Australian economy saw strong growth in early 2018 but slowed in the second half of 2018 and into 2019 as a number of challenges unfolded,” the Treasurer tells The Australian Financial Review.
“However, more recently the tax cuts have been passed, interest rates have been cut, record infrastructure spending is being rolled and the cloud of uncertainty that inevitably comes at election time has been lifted. We are also seeing some better signs in the housing market with a pick-up in the auction clearance rates and the stabilisation of prices in Melbourne and Sydney.
“Despite the challenges we face, the fundamentals of the economy remain sound and we have reason to be positive.”
This comes on top of Housing Minister Michael Sukkar’s exhortation for FHBs to pile into the market and the Government’s fantastically corrupt effort to restore mortgage fraud. Not to mention its election brain fart of government guaranteed FHB deposits, as well as bald faced lying about its plans for huge levels of mass immigration.
It’s quite clear that the ScoMo Government’s economic plan can be summed up in three words: rising, house, prices, and the higher and sooner the better.
So much for the circumstantial evidence. What about a smoking gun? Over the weekend we also glimpsed the revolve the property industry has pointed at the Government:
The property industry has donated twice as much money to the Coalition as it gave federal Labor over the past five years, donations data shows.
Overall, the industry donated $3 million to the federal government between the 2014 financial year and the 2018 period.
Notable donors included Harry Triguboff’s Meriton Properties – whose line of hotels is set to expand into Canberra – and the Property Council of Australia.
It should be noted that the Property Council gave almost as much to Labor. Nonetheless, it’s time for the ScoMo Government pay its piper.
The question is, does the Property Council know how to manage the economy beyond fattening its own members?
Nope. Expect a weak recovery only.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.